Unlock document.
This document is partially blurred.
Unlock all pages and 1 million more documents.
Get Access
1) A business that requires all cash payments be made by check can not use a petty cash
system.
2) The materials requisition serves as the source document for debiting the accounts in
the materials ledger.
3) Many partnerships provide for the admission of new partners or withdrawals of
present partners by amending existing partnership agreements, so that the firm may
continue to operate without executing a new agreement.
4) Managerial accounting uses only past data in reports to aid management in the
decision making process.
5) The process of winding up the affairs of a partnership is referred to as realization.
6) Investment turnover (as used in determining the rate of return on investment) focuses
on the rate of profit earned on each sales dollar.
7) The amount that a partner withdraws as a monthly salary allowance does not affect
the division of net income.
8) A firm selling food should have higher inventory turnover rate than a firm selling
office furniture.
9) Direct disposal costs do not include special advertising or sales commissions.
10) A series of equal cash flows at fixed intervals is termed an annuity.
11) Vertical analysis refers to comparing the financial statements of a single company
for several years.
12) A centralized business organization is one in which all major planning and
operating decisions are made by top management.
13) Cost of oil used to lubricate factory machinery and equipment is an example of a
direct materials cost.
14) Companies recognizing the need to simultaneously produce products with high
quality, low cost, and instant availability have adopted a just-in-time processing
philosophy.
15) Trail Bikes, Inc. sells three Deluxe bikes for every seven Standard bikes. The
Deluxe bike sells for $1,800 and has variable costs of $1,200. The Standard bike sells
for $600 and has variable costs of $200.
Required:
A. If Trail Bikes has fixed costs that total $1,702,000, how many bikes must be sold in
order for the company to break even?
B. How many of these bikes will be Deluxe bikes and how many will be the Standard
bikes?
16) Match the following terms with the best definition given.
1>Occurs when employee self-interests are different from company goals. A. Directing
2>Compare actual performance against budgeted goals. B. Planning
3>Occurs when budgets are too loose. C. Budget padding
4>Setting goals. D. Goal conflict
5>Actions to achieve budgeted goals. E. Controlling
17) A corporation uses the indirect method for preparing the Statement of Cash Flows.
A fixed asset has been sold for $25,000 representing a gain of $4,500. The value in the
operating activities section regarding this event would be:
A.$25,000
B.($4,500)
C.$29,500
D.$4,500
18) Beginning inventory, purchases, and sales for Product - Weld TM are as follows:
Assuming a perpetual inventory system and the last-in, first-out method, determine (a)
the cost of the merchandise sold for the September 30 sale and (b) the inventory on
September 30.
19) A business paid $7,000 to a creditor in payment of an amount owed. The effect of
the transaction on the accounting equation was to
A.increase one asset, decrease another asset
B.decrease an asset, decrease a liability
C.increase an asset, increase a liability
D.increase an asset, increase owner's equity
20) a. A vacant lot acquired for $83,000 cash is sold for $127,000 in cash. What is the
effect of the sale on the total amount of the sellers (1) assets, (2) liabilities, and (3)
owners equity?
b. Assume that the seller owes $52,000 on a loan for the land. After receiving the
$127,000 cash in (a), the seller pays the $52,000 owed. What is the effect of the
payment on the total amount of the sellers (1) assets, (2) liabilities, and (3) owners
equity?
21) Under the periodic inventory system, the journal entry to record the purchase of
merchandise inventory will include a debit to
A.Merchandise Inventory
B.Purchases
C.Accounts Payable
D.Cost of Merchandise Purchased
22) Two income statements for PS Enterprises are shown below:
Prepare a vertical analysis of PS Enterprises income statements. Has operating income
increased or decreased as a percentage of revenue?
A.Yes, increased by 5%
B.Yes, increased by 111%
C.No, decreased by 5%
D.None are correct
23) The debits to Work in Process--Assembly Department for April, together with data
concerning production, are as follows:
All direct materials are placed in process at the beginning of the process and the first-in,
first-out method is used to cost inventories. The materials cost per equivalent unit for
April is:
A.$2.48
B.$2.08
C.$2.50
D.$5.25
24) Which of the following isnot a characteristic of a corporation?
A.Corporations are organized as a separate legal taxable entity
B.Ownership is divided into shares of stock
C.Corporations experience an ease in obtaining large amounts of resources by issuing
stock
D.A corporations resources are limited to their individual owners resources
25) If a two-column (all-purpose) general journal, a revenue journal, and a cash receipts
journal are used, indicate the journal in which each of the following transactions should
be recorded:
(a) Investment of additional cash in the business by the owner.
(b) Rendering of services for cash.
(c) Rendering of services on account.
(d) Receipt of cash on account from a customer.
(e) Sale of office supplies for cash, at cost, to a neighboring business.
(f) Adjustment to record supplies used at the end of the year.
(g) Closing of drawing account at the end of the year.
26) Under the _________ inventory method, accounting records maintain a
continuously updated inventory value.
A.retail
B.periodic
C.physical
D.perpetual
27) Indirect costs incurred in a manufacturing environment that cannot be traced
directly to a product are treated as:
A.period costs and expensed when incurred
B.product costs and expensed when the goods are sold
C.product costs and expenses when incurred
D.period costs and expensed when the goods are sold
28) Which one of the following is NOT a measure that management can use in
evaluating and controlling investment center performance?
A.Rate of return on investment
B.Negotiated price
C.Residual income
D.Income from operations
29) In addition to B2B and B2C transactions, e-commerce is commonly used in all of
the following business activities except:
A.supply chain management
B.regulatory compliance management
C.customer relationship management
D.product life cycle management
30) Which of the following should not be considered cash by an accountant?
A.money orders
B.bank checking accounts
C.postage stamps
D.travelers' checks
31) A business received an offer from an exporter for 10,000 units of product at $17.50
per unit. The acceptance of the offer will not affect normal production or domestic sales
prices. The following data is available:
What is the differential cost from the acceptance of the offer?
A.$200,000
B.$175,000
C.$140,000
D.$110,000
32) On April 30, a business estimates depreciation on equipment used during the first
year of operations to be $2,900. (a) Journalize the adjusting entry required as of April
30. (b) If the adjusting entry in (a) were omitted, which items would be erroneously
stated on (1) the income statement for the year and (2) the balance sheet as of April 30?
33) At the end of the month, the total of the amount column of the revenue journal is
posted as a
A.debit to Accounts Receivable and a credit to Cash
B.debit to Accounts Receivable and a credit to Fees Earned
C.debit to Cash and a credit to Fees Earned
D.debit to Cash and a credit to Accounts Payable
34) A partnership liquidation occurs when
A.a new partner is admitted
B.a partner dies
C.the ownership interest of one partner is sold to a new partner
D.the assets are sold, liabilities paid, and business operations terminated
35) Periods in time that experience increasing price levels are known as periods of:
A.inflation
B.recession
C.depression
D.deflation
36) On December 31, Strike Company has decided to discard one of its batting cages.
The initial cost of the equipment was $310,000 with an accumulated depreciation of
$260,000. Depreciation has been taken up to the end of the year. The following will be
included in the entry to record the disposal.
A.Accumulated Depreciation Dr. $310,000
B.Loss on Disposal of Asset Dr. $260,000
C.Equipment Cr. $310,000
D.Gain on Disposal of Asset Cr. $50,000
37) Which of the following is the principle reason for preparing managerial accounting
reports?
A.Usefulness to management
B.Cost of preparation
C.Clarity
D.GAAP
38) The Thomlin Company forecasts that total overhead for the current year will be
$15,000,000 and that total machine hours will be 300,000 hours. Year to date, the actual
overhead is $16,000,000 and the actual machine hours are 330,000 hours. If the
Thomlin Company uses a predetermined overhead rate based on machine hours for
applying overhead, what is that overhead rate?
A.$48 per machine hour
B.$53 per machine hour
C.$45 per machine hour
D.$50 per machine hour
39) Mason Corporation had $650,000 in invested assets, sales of $700,000, income
from operations amounting to $99,000, and a desired minimum rate of return of 15%.
The profit margin for Mason is:
A.7.1%
B.20%
C.15.2%
D.14.1%
40) What additional information is needed to find the rate of return on investment if
income from operations is known?
A.Invested assets
B.Residual income
C.Direct expenses
D.Sales
41) On December 31 it was estimated that goodwill of $65,000 was impaired. In
addition, a patent with an estimated useful economic life of 10 years was acquired for
$60,000 on July 1.
42) Using the variable cost concept determine the selling price for 30,000 units using
the following data: Variable cost per unit $15.00, total fixed costs $90,000 and desired
profit $150,000.
A.$10
B.$15
C.$8
D.$23
43) On December 31, Strike Company has decided to sell one of its batting cages. The
initial cost of the equipment was $310,000 with an accumulated depreciation of
$260,000. Depreciation has been taken up to the end of the year. The company found a
company that is willing to buy the equipment for $50,000. What is the amount of the
gain or loss on this transaction?
A.Gain of $50,000
B.Loss of $50,000
C.No gain or loss
D.Cannot be determined
44) Cash equivalents
A.are illegal in some states
B.will be converted to cash within two years
C.will be converted to cash within 90 days
D.will be converted to cash within 120 days
45) Under the allowance method, when a year-end adjustment is made for estimated
uncollectible accounts
A.Liabilities decrease
B.Net Income is unchanged
C.Total Assets are unchanged
D.Total Assets decrease
46) When a job is completed in a service organization, the job costs are transferred to
the
A.work in process account
B.cost of services account
C.finished goods account
D.cost of goods sold account
47) Davidson, Inc. incurred the following transactions during the month of January.
Record the appropriate ones in the Cash receipts journal. If a transaction should not be
recorded in the Cash receipts journal, indicate where it should be posted.
(a) On January 3rd a one-year insurance policy was purchased for $2,400. The account
number for Prepaid Insurance is 16.
(b) On January 5th Davidson received a payment on account from Pasher Industries of
$625.
(c) On January 12th Davidson made sales on account of $3,500 and sales for cash of
$2,300. The Fees Earned account number is 41.
(d) On January 26th Davidson received $1,250 in rent revenue from a tenant who leases
a portion of their building. The Rent Revenue account number is 44.
(e) On January 29th Davidson received a payment on account from Gooden, Inc. for
$2,000.
48) Zenith Corporation sells some of its used store fixtures. The acquisition cost of the
fixtures is $12,500, the accumulated depreciation on these fixtures is $9,750 at the time
of sale. The fixtures are sold for $5,300. The value of this transaction in the Investing
section of the statement of cash flows is:
A.$12,500
B.$5,300
C.$2,750
D.$2,550
49) Below is budgeted production and sales information for Bluebird Company for the
month of December:
The unit selling price for product XXX is $5 and for product ZZZ is $14.
Budgeted production for product XXX during the month is:
A.522,000 units
B.552,000 units
C.518,000 units
D.520,000 units
50) Accounting designed to meet the needs of decision-makers inside the business is
referred to as:
A.general accounting
B.financial accounting
C.managerial accounting
D.external accounting
51) Retained earnings
A.is the same as contributed capital
B.cannot have a debit balance
C.changes are summarized in the retained earnings statement
D.is equal to cash on hand
52) A characteristic of a fixed asset is that it is
A.intangible
B.used in the operations of a business
C.held for sale in the ordinary course of the business
D.a short-term investment
53) Miramar Industries manufactures two products, A and B. The manufacturing
operation involves three overhead activities - production setup, material handling, and
general factory activities. Miramar uses activity-based costing to allocate overhead to
products. An activity analysis of the overhead revealed the following estimated costs
and activity bases for these activities:
Each products total activity in each of the three areas are as follows:
What is the overhead allocated to Product B using activity-based costing?
A.$135,000
B.$175,000
C.$292,500
D.$285,500
54) The inventory at April 1, 2012, and the costs charged to Work in
Process--Department B during April for Hawk Company are as follows:
During April, all direct materials are transferred from Department A, the units in
process at April 1 were completed, and of the 10,000 units entering the department, all
were completed except 1,200 units which were 25% completed as to conversion costs.
Inventories are costed by the first-in, first-out method.
Prepare a cost of production report for April.
55) An 8-year project is estimated to cost $400,000 and have no residual value. If the
straight-line depreciation method is used and the average rate of return is 5%, determine
the estimated annual net income.
56) Cordell, Inc. has an operating leverage of 3. Sales are expected to increase by 9%
next year. What is the expected change in operating income next year?
57) Journalize the entries to record the following selected equity investment
transactions completed by Flurry Company during 2012. Flurrys purchase represents
less than 20% of the total outstanding Braxter stock.
58) On May 7, Carpet Barn Company offered to pay $83,000 for land that had a selling
price of $105,000. On May 15, Carpet Barn accepted a counteroffer of $95,000. On
June 5, the land was assessed at a value of $115,000 for property tax purposes. On
December 10, Carpet Barn Company was offered $135,000 for the land by another
company. At what value should the land be recorded in Carpet Barn Companys records?
59) What is a capital expenditures budget?
60) On the first day of the fiscal year, a company issues a $1,000,000, 7%, 5 year bond
that pays semi-annual interest of $35,000 ($1,000,000 7% 1/2), receiving cash of
$884,171. Journalize the entry to record the issuance of the bonds.
61) Using the following table, what is the present value of $25,000 to be received 5
years, if the market rate is 7% compounded annually?
